Personal Finance

CRA going after paypal business holders

  • Last Updated:
  • Nov 17th, 2017 9:26 pm
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This thread has gone completely on a tangent . The question remains how do paypal users , at THE PRESENT TIME, mitigate their risks?
The opinions expressed herein are neither opinions, nor expressed.
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grilw wrote:
Nov 14th, 2017 6:56 pm
This thread has gone completely on a tangent . The question remains how do paypal users , at THE PRESENT TIME, mitigate their risks?
What risks? The same way any CRA questions are dealt with. You produce your receipts, invoices and evidence that they ask for. The same "risk" is present for anyone regardless of using PayPal or not.

If your question is how do people mitigate risk after evading taxes all these years, that is a different question. Speak to a tax lawyer.
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Dec 11, 2007
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how are gifted (friends and family) payments viewed?
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FoFai2015 wrote:
Nov 14th, 2017 6:47 pm
For those saying you don't need to file if you made less than the basic personal amount, that's not entirely true. If you made more than $3,500 of net business income, you have to pay CPP. Of course, if your income is low, you might actually get more money from the Working Income Tax Benefit. You might not have to pay tax due to low net business income, but it's always better to file to prove this (and get any benefits you can out of the tax system while you're at it). This is especially true if you have lots of revenue (eg $300,000) but low net income (eg $5,000). The CRA is not clairvoyant and will not know your expenses if you don't tell them, but they can "assume" you had low expenses and assess a lot of tax.

Furthermore if you lost money, you can claim losses against other income (for instance, against lifeguard income) or if you have no other income, carry it forward for a later year where you have to pay taxes.

TLDR: If your revenue is more than $3,500, file your taxes. If you are both employed and self-employed, file your taxes (and not just what's on your T4), even if your income is low.



He's just trying to scare you. Noone is going to jail for $24. Putting you in jail for 1 hour costs more than that.

If you are employed and also made $24 via Paypal, you actually should report that $24. (If that's your revenue, you should report that as gross business income, and your net business income would be the only part of that taxed.)

Having said that, the amount is small. You might owe $5 on that, plus late penalties and interest. It's literally not worth the CRA's time to go after you for that.
Thanks. It is quite less because Paypal charges money for the transaction. So, in all, I made about $23. See? I do not evade taxes.

It is worth mentioning that I earned that money AFTER the 2016 filing deadline (which was April 30th, 2017). So, I will be claiming that $23.0 something on my 2017 tax return.

I work for the City for the Lifeguard job. I do not intend to break laws and I would do my fair share of paying taxes. I will never evade taxes. Even if I run a company, I will be paying my fair share of taxes and not trying to get caught in a tax evasion scheme.

I want to know that you guys are not talking to a criminal here but a regular guy that is too young to understand.
Last edited by GeorgeG837585 on Nov 14th, 2017 7:29 pm, edited 1 time in total.
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don242 wrote:
Nov 14th, 2017 7:04 pm
What risks? The same way any CRA questions are dealt with. You produce your receipts, invoices and evidence that they ask for. The same "risk" is present for anyone regardless of using PayPal or not.

If your question is how do people mitigate risk after evading taxes all these years, that is a different question. Speak to a tax lawyer.
What's up with every other poster assuming that everyone else is a tax cheat and turning the conversation into a game of cops and robbers? There are hundreds of people who view this conversation, and they all use paypal differently. You won't know who's the $1/year user and who's the $1,000,000/year user, so let's just be civil and assume innocent until proven guilty.

Nobody, and that includes law abiding citizens, want to be subjected to an audit, ever. This we know without a doubt. As the thread has uncovered, there are a variety of reasons why innocent PayPal users may find themselves swept up into this. Moreover, some of us simply aren't interested in making the government's life easier, and that can happen for various reasons.

Seeing as this is the digital age, I was thinking more along the lines of taking some sort of proactive/preventative measures NOW, such as changing/distorting Paypal info before it's disclosed to the CRA to make reconciling identities harder, or some other create tactic. It is for these creative that I'm participating here, not to be told to go "Speak to a tax lawyer", but thanks. Perhaps others with a better understanding of the disclosure process can chime in.
The opinions expressed herein are neither opinions, nor expressed.
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grilw wrote:
Nov 14th, 2017 7:33 pm

Seeing as this is the digital age, I was thinking more along the lines of taking some sort of proactive/preventative measures NOW, such as changing/distorting Paypal info before it's disclosed to the CRA to make reconciling identities harder, or some other create tactic. It is for these creative that I'm participating here, not to be told to go "Speak to a tax lawyer", but thanks. Perhaps others with a better understanding of the disclosure process can chime in.
The court order to PayPal was for documentation within a specific time frame that has passed. Changing your PayPal info now might help when future court orders are made. Won’t help with the current court order.

If someone thinks they are in jeopardy of being reassessed for unreported income there is a way to avoid the penalties that will be applied. By the filing of a voluntary disclosure with CRA of the amounts evaded. This must be done prior to CRA contacting you to avoid the penalties.
The Duke
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grilw wrote:
Nov 14th, 2017 7:33 pm
What's up with every other poster assuming that everyone else is a tax cheat and turning the conversation into a game of cops and robbers? There are hundreds of people who view this conversation, and they all use paypal differently. You won't know who's the $1/year user and who's the $1,000,000/year user, so let's just be civil and assume innocent until proven guilty.

Nobody, and that includes law abiding citizens, want to be subjected to an audit, ever. This we know without a doubt. As the thread has uncovered, there are a variety of reasons why innocent PayPal users may find themselves swept up into this. Moreover, some of us simply aren't interested in making the government's life easier, and that can happen for various reasons.

Seeing as this is the digital age, I was thinking more along the lines of taking some sort of proactive/preventative measures NOW, such as changing/distorting Paypal info before it's disclosed to the CRA to make reconciling identities harder, or some other create tactic. It is for these creative that I'm participating here, not to be told to go "Speak to a tax lawyer", but thanks. Perhaps others with a better understanding of the disclosure process can chime in.
And my point is that people are overreacting to this order. Especially if they have nothing to hide.

Trying to change your PayPal info just to make it more difficult to track you down seems like you are just inviting the CRA to investigate deeper once they do track you down.
Newbie
Nov 13, 2017
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New user here, randomly came across this post, would like to share my thoughts on the subject.
I read a lot of suggestions, assumptions, and some panic suggestions. The way I see this situation, it's a standard practice and it expected for CRA to look into paypal whether earlier or later. Most business users use PayPal legitimately and really nothing to worry about, there are hundreds of thousands of business account holders in Canada alone. CRA is most likely here for large or medium type of fish that abused the system over years without any track of income filing. Its unreasonable for them to audit every account, too much resources.
I see some have mentioned proactive/preventative steps to take, I think, it is not efficient at this moment, paypal logs all activity (just like a legitimate bank does) and links all your paypal accounts (including personal and business), especially if there are matching data: Name, Address, bank, telephone number, including IP access and frequency of access.
Also, some users may have switched between personal and business account within the specified reporting perriod (2014 - 2017), its unreasonable for paypal not to log and provide data when the account was used for personal and for business purposes.

Wish all luck and don't stress. Our transaction data gets transfered by banks to CRA all the time, we never know about it. PayPal at least sent a letter.
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grilw wrote:
Nov 14th, 2017 6:56 pm
This thread has gone completely on a tangent . The question remains how do paypal users , at THE PRESENT TIME, mitigate their risks?
Get some cheap (free?) accounting software.
Make sure anything personal is separate from anything business-related.
If you run a business and haven't been reporting that income, report it immediately.
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FoFai2015 wrote:
Nov 14th, 2017 8:24 pm
Get some cheap (free?) accounting software.
Make sure anything personal is separate from anything business-related.
If you run a business and haven't been reporting that income, report it immediately.
Why keep personal separate from business related? What do you mean by this?
Sr. Member
Jul 19, 2007
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grilw wrote:
Nov 14th, 2017 6:56 pm
This thread has gone completely on a tangent . The question remains how do paypal users , at THE PRESENT TIME, mitigate their risks?
Ebay/Paypal will just lose more business.
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Jan 15, 2017
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gbill2004 wrote:
Nov 14th, 2017 8:42 pm
Why keep personal separate from business related? What do you mean by this?
See my post #106 for the answer.
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I don't understand why the CRA is trying to put out "good news" and go after the "Small people" BUT can't do anything against the MILLIONAIRES with MILLIONS OVERSEAS. Seems pretty unfair to me.

Governemnt always likes to put out good news, YEA we gonna * those people who use PayPal to sell crap online and make $10 and don't pay taxes. Yet turns a blind eye to those **** who are hiding millions and millions and probably owe more money than people selling crap on Etsy and eBay etc...

I'm all for paying taxes, but why do the little people always get *?

---------------------------------

https://www.thestar.com/news/world/2016 ... heats.html

The Canada Revenue Agency claims at least nine people have been convicted of offshore tax evasion over the last two years, receiving $4 million in fines and 84 months of jail time, but it is keeping the names of these tax cheats secret.

Yet there are dozens of people — carpenters, hairdressers, farmers, plumbers, foresters, realtors, architects — who are named and shamed on the CRA’s website for not paying small amounts of tax.

This double standard means that small business owners who fall behind on tax payments, or servers who don’t declare their tips, are publicly outed for their relatively paltry offences, while wealthy individuals and businesses caught hiding millions in offshore tax havens are guaranteed anonymity.

Even though criminal convictions for tax evasion should be public information, without the defendants’ names, case numbers or knowledge of which courthouse the convictions were handed down in, it’s impossible to determine the identities of offshore tax cheats.

In the wake of the Panama Papers revelations, Ottawa pledged $444 million over five years to crack down on tax cheats and said it will focus on those who use offshore tax havens. But in several high-profile cases of offshore tax evasion that have emerged over the last year, including one scheme in which KPMG helped wealthy clients hide $130 million in the Isle of Man, the perpetrators remain unnamed.

“Although the CRA can provide aggregate statistics on the convictions with links to money or assets held offshore, we are not able to give the names and case numbers of the people convicted as this may contravene taxpayer confidentiality,” wrote CRA spokesperson David Walters in an email to the Star.

“The details that we are able to include in our conviction news releases is limited to what is presented in the courts and part of the public record. As a result, if the public record does not include information linking the convicted taxpayer to money and assets located offshore, we are not able to report this information,” he wrote.

In April, the federal anti-money-laundering agency, Fintrac, fined a bank $1.1 million for failing to report a suspicious transaction, but refused to name the institution.

“It’s outrageous,” said NDP MP Murray Rankin. “All the CRA wants to do is go after big penalties for the hairdresser who wrote off more than she should.”

The former revenue critic says the policy contributes to the development of a two-tier tax system.

“The people who have the ability to arrange their affairs using tax havens tend to be large family trusts, corporations and the like, whereas the government goes after little people to collect their taxes very aggressively,” he said.

While the CRA will not divulge the identities of people caught stashing millions overseas, it has no problem naming people who were charged for owing small amounts of tax.

In January, the agency posted a news release on its website naming eight Ontarians and two businesses that were fined between $1,000 and $8,000 after they were “convicted and sentenced for failing to file corporate, personal and/or GST/HST returns.”

One of those people is Dragan Micanovic, a 59-year-old cabinetmaker from Etobicoke, who was fined $2,000 for failing to file tax returns. His company, CIC Fine Woodworking & General Contracting Ltd., was also fined $2,000.

Micanovic, who fled war-torn Bosnia with his wife and two small children in the late 1990s, arrived in Canada “with nothing,” he said, and built his business from scratch.

“It’s not fair,” said the silver-haired craftsman as he stood on a carpet of sawdust in his Mississauga workshop. “It’s very hard for the little people.”

“Last year, the CRA froze my account. They took money. I lost insurance,” he said. “I say: ‘If you freeze my account, how can I work? How can I pay tax?’ ”

For years, Micanovic’s bread and butter has been replacing kitchens in rental apartments, he said, explaining that each building brought him about 10 kitchens a year. But when he lost his contract with a major landlord, he said he no longer had regular income and was owed $120,000 for work he’d already done.

“I lose business and I don’t know what to do,” he said. “The bank don’t want to help you. Nobody help you.”

“Big companies, Bell, Rogers, if I don’t pay my bill, they cut off the phone. But if my client doesn’t pay, what can I do but cry?”

Desperate to make ends meet, Micanovic took out lines of credit and maxed out his credit cards in order make mortgage payments, pay rent on his workshop and support his daughter’s university education.

“I have enough for rent, but no money to live,” he said.

Micanovic moved to a workshop with cheaper rent and even shut down his business in an effort to put the debts behind him. But soon the CRA started calling.

“They no stop calling you,” he said. “I stopped answering the phone.”

He filed five years of tax returns for his now defunct business, but that did little to dissuade the CRA.

“My bookkeeper sent them everything. He put zeros everywhere, but they still want money. They push you, push you, push you. I don’t get paid for three months, they don’t care. And they no try to help you. That’s the problem.”

“If you have no money, they charge you interest. And it goes on and on. It never ends.”

Beyond keeping them anonymous, some critics say the CRA is misleading the public about the number of prosecutions of offshore tax cheats.

Queen’s University tax law Prof. Arthur Cockfield questions the CRA’s claims to have convicted any real offshore tax evaders.

“I can’t find any successful prosecutions,” he said. “I’ve had researchers look.”

If the government doesn’t publicize the names of convicted offshore tax cheats, there’s no deterrence for others who might go down the same path, Cockfield said.

“If you want to deter criminals, convict them,” he said.

Sen. Percy Downe, who has made cracking down on offshore tax evasion his personal quest, said he has not been able to get a single name out of the CRA.

“The CRA does an outstanding job on domestic tax evasion. If you owe money to the Revenue Agency and you live in Canada and you bank in Canada, your chances of getting caught are extremely high. There are criminal charges, prosecutions and jail sentences,” Downe said. “But there hasn’t been one overseas tax evasion conviction.”

“There’s no penalty,” Downe said. “Nobody has gone to jail for this. The carpenter from Saskatchewan or the plumber in New Brunswick, it’s a different story. They’re shamed and charged and so on.”

In 2013, the CBC filed a freedom of information request and received a list of 25 names of people convicted for offshore tax evasion. But after going through court records, the CBC determined that only eight of the people on the list actually were actually found guilty of hiding income or assets in a tax haven.

In an effort to bolster offshore tax prosecutions, the CRA launched an offshore tax cheat tip line in 2014, offering informants 5 to 15 per cent of the amount recovered, as long as it’s more than $100,000.

The agency says it has launched 140 tax audits based on tips that came in through the program. But to date, there have been no convictions and no awards have been paid out.

The CRA reports that 145 people have been convicted for tax evasion or fraud since April 1, 2014. The tax cheats were fined $14.1 million for evading $19 million in federal tax, and received 1,219 months in jail.

Nine of these people were involved in offshore activity in 2014/2015, the CRA says, though it was unable to break out statistics for convictions linked to money and assets held offshore for 2015/2016.

Read more about: Canada Revenue Agency
Last edited by MrDisco on Nov 14th, 2017 9:15 pm, edited 1 time in total.
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grilw wrote:
Nov 14th, 2017 6:56 pm
This thread has gone completely on a tangent . The question remains how do paypal users , at THE PRESENT TIME, mitigate their risks?
If you are actually running a business, realistically most people should know if they are, then start getting receipts in order for expenses as CRA will most likely assess arbitrarily on revenue as they will have that info from PPal. It is up to the taxpayer to refute the assessment.

If someone is in real deep chit, again, they should know, they might consider filing under the VDP to save penalties. That would need to happen BEFORE CRA contacts them though.

https://www.canada.ca/en/revenue-agency ... rview.html

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